By Noele Illien and John O'Donnell
ZURICH (Reuters) - Switzerland's regulator should get extra powers, such as the ability to fine banks, a group of Swiss lawmakers said, following the failure of Credit Suisse (SIX:CSGN), the biggest bank casualty since the global financial crisis.
The proposal from the Swiss parliamentary committee represents a modest attempt at reform, largely bringing its supervisor into line with international peers, after the state had to bankroll its emergency takeover by rival UBS.
The lawmakers want regulator FINMA to get the power to fine, as well as obliging banks to name key risk takers and publish stress tests - standard practice in Europe but not yet in Switzerland, despite its outsized financial sector.
"At the moment, this is the lowest common denominator of what we could agree on," said Eva Herzog, one of Switzerland's most influential politicians and a backer of reform.
"We have other reform proposals that we will pursue in 2024. We want reform so that we don't end up in the same mess again as we had with Credit Suisse."
UBS emerged as Switzerland’s single largest bank earlier this year after the government hastily arranged its takeover of stricken Credit Suisse to prevent its collapse.
The failure of one of the world's biggest banks and a one-time symbol of Swiss financial strength blindsided the country's officials and regulators, who had long grappled with the lender as it lurched from one scandal to the next.
Public debate in Switzerland has, however, been muted, even in recent national elections.
"The idea of these immediate changes is naming and shaming - shaming banks who are fined, naming key managers and publishing stress tests," said lawmaker Herzog.
Earlier this year, Switzerland's financial regulator deflected blame for the collapse of the country's second-biggest bank saying it had been quick to respond, calling instead for more powers to take lenders to task.
As far back as 2019, the International Monetary Fund had warned Switzerland about the need to strengthen its regulator, urging that its "autonomy, governance and accountability" be strengthened.
The regulator, however, has enjoyed little support among Swiss politicians, many of whom long sought to keep it weak. In the run up to the collapse of Credit Suisse, FINMA saw a string of key departures.
In keeping with a popular "free-market" philosophy, Switzerland has few means of controlling its big banks, with industry often trusted to keep itself in check.
A Swiss parliamentarian and commission member said the three new powers could become law as soon as in the second half of 2024.